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The TV Road To...
“This is a really, really important time for ESPN. They have to literally plan out the next several years because the next several years, I think, is going to determine the entire next decade for the network.” - James Andrew Miller, on the Sports Illustrated Media Podcast with Richard Deitsch and author of Those Guys Have All the Fun: Inside the World of ESPN

Many of you are likely settled in to see how Mississippi State responds to its incredible win Friday night over Connecticut in hopes of securing the Women’s Basketball National Championship. Since the title tilt with South Carolina is on ESPN, now is also a useful time to get caught up on some key developments around the sports media industry pertinent to the future of college athletics. 

This past Thursday, Sports Illustrated’s Richard Deitsch released a lengthy podcast with notable author and ESPN expert James Andrew Miller on his weekly sports media podcast. Few others outside Bristol - you could easily argue Miller is inside Bristol given his deep lineup of sources - have such a strong grasp on all the working parts at the Worldwide Leader, so anytime Miller goes into depth, pay close attention. Here’s what you need to know:

(2:59) As you’ll recall, Deitsch was the first to report a few weeks ago on more layoffs coming at ESPN, “in the tens of millions of dollars.” Miller says he’s done the math and expects 40 to 50 on-air personalities to be impacted, though he pegs the overall cuts at closer to $30M than some who have speculated it to be up to $100M. “There’s a lot of uncertainty about who it’s going to be and why. Remember, this is not quantum physics, so it’s not an exact equation.” Miller fully expects Mike Greenberg to have his own show every weekday morning from 7am to 10am, altering the morning programming schedule away from SportsCenter and in direct competition to broadcast network morning shows and cable news politics talk. Deitsch says it’s very clear that talent within the SportsCenter unit who don’t have a “golden ticket” should be worried. Given the network's portfolio in college athletics, it seems likely we'll hear about changes for those who have been in front of the camera soon.

(17:24) Miller on the 6pm SportsCenter with Michael Smith and Jemele Hill that’s been framed as a cultural show, not one solely focused on sports, “They’re trying to be like a buffet there. They’re trying to do anything they can. This is a time of tremendous experimentation at ESPN, there’s not a lot of known certainties. The only certainty is that Burbank has said, ‘Stop spending money like a drunken sailor. We need to figure this out, we’re losing households and by the way, you start saving up for 2020 when some of these rights come up.’ [...] We’re in a bit of a lull right now, but pretty soon there’s going to be some really big deals. So, they gotta start planning for that.” In this same exchange, Miller wonders if there’s a “point of diminishing returns” for individuals who watch political commentary who may get tired of the drama and return to sports for “escapist entertainment.” Deitsch wholly disagrees.

(33:35) “Bob Iger is literally one of the great media executives of our times.” Miller believes the proof is in the shareholder returns for Iger’s run at Disney and thinks Iger pushing back his retirement once again should be “comforting” for ESPN leaders given the state of the sports TV landscape and more importantly, the financial challenges. Big question: “Where’s the turnaround...where are we going to (get the multiples like they did with cable fees)?” Big statement: Iger is a “planning guy” and Miller says there’s some concern from Burbank on who succeeds ESPN President John Skipper. Skipper’s current deal expires in the summer of 2018. Big future: All the rights in the marketplace between 2020 and 2024. “Is ESPN going to be able to afford it all, as much as they have now? Maybe not and if that’s the case, then you gotta do triage and you start with the fact that the NFL is ESPN’s crack cocaine and they gotta get in there, they gotta keep the NFL, but at the same time they pay way more than anyone else right now and they have the fourth worst schedule. So, how patient are they going to be about that? Then all of a sudden, Google, Facebook, Amazon, Netflix, when are any of them going to start bidding in different ways that’s going to raise the ante?”

Timeline of key TV rights
+ Before 2020: The NFL’s Thursday Night package (currently: CBS/NBC), UFC (Fox Sports) and the PGA Tour (CBS/NBC)
+ The NHL’s TV rights are up in 2021 (NBC Sports)
+ Major League Baseball’s rights are held through 2021 (Fox/ESPN/Turner)
+ NBC also has the English Premier League until the end of the 2021-22 season and Olympics until after the 2032 Summer Games
+ Top NFL deals (CBS/Fox/NBC) are squared away through the 2022 campaign
+ The Big Ten's Tier I agreements with Fox/ESPN expire in 2024
+ The Pac-12 will be with Fox/ESPN until the Spring of 2024
+ The NBA’s rights deals run through the 2024-25 season (Turner/ESPN/ABC)
+ The Big 12 is done through 2024-25 (ESPN/Fox)
+ The College Football Playoff’s rights are with ESPN until after the National Championship in 2025
+ Fox and Telemundo have FIFA’s World Cup through 2026
+ March Madness is on CBS until 2032
+ The SEC marriage with CBS/ESPN lasts until 2034
+ ESPN now has the ACC through 2036 along with the coming linear ACC Network to launch in 2019

For those of you who have engaged with previous ADU entries of this nature (here, here, here and here), you know it’s virtually impossible for me not to reference Stratechery’s Ben Thompson and some of his keen analysis. In late February, YouTube announced plans for its OTT platform, branded simply as ‘YouTube TV.’ The value proposition is high-profile live sports with the inclusion of all four broadcast networks and their cable channels, though Turner did not cut a deal, leaving out the NCAA Tournament and key NBA Playoffs matchups, among other assets. Also on the sidelines are the likes of AMC, Nickelodeon, Cartoon Network, all four dedicated pro sports outlets & a handful of other regional sports networks. To Thompson, the strategy by ESPN continues to be all kinds of off:

Here’s the problem: YouTube TV may be offering the same service as Sling TV or PlayStation Vue or DirecTV, but while those companies are mere distributors, YouTube TV is owned by YouTube a.k.a one of the primary agents of media company’s demise. It is staggering to me that, having witnessed the content industry sell its future to Netflix for a short-term fix, the same companies are making the same mistake. It shouldn’t matter how much YouTube TV is willing to pay, or how many subscribers they can add that wouldn’t have been subscribed to one of the other over-the-top services: doing any sort of deal that further entrenches YouTube as a video destination site is suicidal! 

Honestly, this deal really makes me question my faith in Iger in particular: the Disney CEO seems so consumed with stemming ESPN subscriber losses - losses that are due to structural changes, not any particular problem with ESPN itself - that he is - much like the company’s Netflix deal - betraying his company’s future in the pursuit of a short-term break.

While Thompson questions ESPN’s strategy of being a part of all the skinny bundles in the marketplace, one area the Worldwide Leader may be adding spark is via a set of full out-of-home (OOH) Nielsen ratings. AdAge’s Anthony Crupi released a thome of data on how high ESPN jumped and at the top of the heap was the 2016 Rose Bowl between Iowa and Stanford that saw “an additional 1.15 million viewers who watched the game outside the friendly confines of their own dens and living rooms. The OOH deliveries marked a 9% lift compared to the broadcast’s standard C3 rating, bringing the game’s total audience to nearly 15 million viewers.” The 2016 College Football Playoff, maligned by many because of its low viewership marks and the reported $20M makegoods situation that followed, was another that finished with a nice bump. More Crupi: “All told, ESPN’s 10 biggest OOH draws in 2016 contributed an additional 7.69 million viewers that would have gone unrecognized at any other network.” Maybe most importantly, the gains were sharpest in the coveted 18-34 age demo where advertisers love to spend money. 

Nielsen certainly has its rough spots. To start, it extrapolates data from 45,000 households onto a total universe of 125 million households here in the States. The sample size technically works, but it’s a big gap. But, stealing from James Andrew Miller, this is not quantum physics. Clearly lots of fans around the nation enjoy watching their schools alongside friends at bars, restaurants and other establishments. Finally, ESPN, and soon others, will have full access to this key data set and in due time ad buyers will have to accept the ratings increases. More ad money, good news.

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